The Zhitong Finance App learned that Debon Securities released a research report stating that it maintains China's Hongqiao (01378) “buy” rating and is expected to achieve net profit of 117, 129, and 13 billion yuan in 24-26. The company released its 2023 annual report. During the reporting period, the company achieved total revenue of 133.6 billion yuan, an increase of about 1.5% over the previous year; realized net profit of 11.5 billion yuan to mother, an increase of about 31.7% over the previous year. China's Hongqiao currently has a decline in coal prices on the cost side. At the same time, it has had excellent performance in 23 years and an increase in dividend rates.

The main views of Debon Securities are as follows:

The increase in the profit of electrolytic aluminum contributed to the main profit.

Judging from the company's product production and sales situation, in 2023, the company sold 5.748 million tons of aluminum alloy products, respectively, up about 5.0% from 5.473 million tons in the same period last year; sold 10.374 million tons of alumina products, up about 25.0% year on year; sold 580,000 tons of aluminum alloy processed products, down about 5% year on year. In terms of product prices, the sales price of aluminum alloy products decreased by about 6.4% year on year to 16,464 yuan/ton (VAT not included); the average sales price of alumina fell 0.8% year on year to 2,560 yuan/ton (excluding VAT); and the average sales price of aluminum alloy processed products fell 9.2% year on year to 1,834 yuan/ton (excluding VAT).

Furthermore, judging from the average profit level of the industry, according to SMM data, the average profit level of the electrolytic aluminum industry in 2023 was about 2213.88 yuan/ton, up about 14.4% year-on-year from 1935.49 yuan/ton in 2022. The profit expansion of electrolytic aluminum products may be one of the main contributions to the company's profit.

High dividends continued, and dividend rates increased.

In terms of dividends, the company accumulated 2 dividends during the year, including the total dividend of HK$0.34 per share for the mid-term dividend plus the special dividend, and the year-end dividend declared dividend of HK$0.29 per share. In 2023, the cumulative cash dividend was 6 billion yuan, and the dividend payment ratio was about 47.59%. In terms of dividend rate, based on the closing price of March 22, 2024, the company's dividend rate in 2023 was about 9.86%, up from 6.92% in 2022.

The recent decline in coal prices may have a positive impact on the company.

Judging from the current coal price situation, as of March 22, 2024, thermal coal prices were reported at 838 yuan/ton, down about 9.0% from the beginning of the year. As of March 22, 2024, the average price of thermal coal in the first quarter of '24 was about 908.02 yuan/ton, down about 5.2% from the fourth quarter of 2023 and about 20% year-on-year from the first quarter of 2024. Thermal coal is one of the main costs in the production of electrolytic aluminum, and it is expected that the decline in coal prices will have a positive impact on the company.